“India lives in her villages” – M K Gandhi
“Self sufficient villages” were envisioned to be the pillars of the Indian growth story; a story which never really followed the original script! The ubiquitous money lenders, exorbitant interest rates and eternal bondage through ever mounting debts formed a sad tale for monsoon-dependent Indian villages. Mass suicides and migration to the cities are just symptoms of the underlying syndrome. The ever increasing rural-urban divide is made sharper by the vicious bi-directional flow – that of human resources moving from villages to suburbs, towns to cities, while that of services and occupational opportunities trickling down the reverse direction.
Liberalization was supposed to change things. The floodgates to Indian markets were opened. However, private players mainly concentrated on capturing the relatively rich upper and middle classes. But now competition coupled with stagnant growth in the current markets have forced them to look beyond the fringes of the Tier 2 cities to the untapped potential of 70% of the population – the villages.
Two such rural forays of note are ITC’s e-choupal (2000) and HUL’s Project Shakti (2001). ITC’s initiative enabled farmers to market their products and readily access crop-specific, customised and comprehensive information on best farming practices. Project Shakti was an alternative distribution system and a bottom-of-the-pyramid initiative for tapping the rural market through women entrepreneurs.
Meanwhile, in Bangladesh, Prof Muhammad Yunus, pioneered a revolutionary model to disburse credit to the lesser affluent – what is now known as the Grameen Model of Microfinance. Small loans (micro-credit) were made available to women to start their own ventures (e.g. vegetable stalls). Once their micro-enterprises were stable, the clients availed of a host of financial services like housing, sanitation loans, savings account & insurance. The success of this model brought about the Microfinance wave in Indian banking. Many national (ICICI Bank) and international banks (Deutsche Bank) as well as venture capital funds adopted various models to capture this new market. Simultaneously the high operating costs were reduced by automating the transactions with the use of technology like mobile phones, interactive voice response technology, biometric cards, MIS systems and newer microfinance delivery models like online lending platforms.
Increased access to capital as well as creating markets for consumer goods & services in rural India is the key to realising our potential as a nation. As they say we still “have miles to go” before we sleep! Horizons 2007, the annual management conclave of IIM Kozhikode will serve as a platform for eminent speakers to share their ideas on Rediscovering Rural India.
Beena Venugopalan, IIM Kozhikode.
